There are many ways to find investment ideas. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue. Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies, and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they…
There are many ways to find investment ideas. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue.
Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies, and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they are doing as a way to generate ideas.
I want to look at two Singapore REITs that have seen the highest net purchase in dollar value by institutional investors in March. They are Mapletree Logistics Trust (SGX: M44U) and Mapletree North Asia Commercial Trust (SGX: RW0U).
Source: Singapore Exchange; SGX Stock Facts
The first REIT that saw its shares purchased by institutional investors is Mapletree Logistics Trust, or MLT, a real estate investment trust (REIT) that owns 140 logistics properties around the Asia-Pacific region, which includes Singapore, Hong Kong, Japan, China, South Korea, Australia, and others.
In the latest quarter ended 31 December 2018, MLT reported that gross revenue grew 23.0% to S$120.8 million, while net property income jumped 25.9% to S$104.5 million. Also, distribution per unit (DPU) was up by 5.0% year on year to 2.002 Singapore cents, mainly due to the higher net property income. The 5.0% year-on-year growth in DPU was achieved despite an increase in shares from 3.1 billion last year to 3.6 billion this year. The stronger performance was mainly driven by growth from the existing portfolio as well as contributions from new acquisitions.
Ng Kiat, chief executive officer of MLT’s manager, commented:
“Amidst the volatile economic environment, we remain vigilant and focused on working closely with our tenants to maintain a stable portfolio performance. During the quarter, we have strengthened MLT’s portfolio with the acquisitions of three quality logistics facilities in Australia, South Korea and Vietnam and the divestment of a warehouse with older specifications in Singapore. We will continue to keep the momentum on portfolio rejuvenation through quality acquisitions and selective divestments.”
As of 31 December 2018, the REIT’s gearing stood at 38.8%, while its occupancy rate stood at 97.7%.
The next REIT that has recently seen its shares purchased by institutions is Mapletree North Asia Commercial Trust, or MNACT, a Singapore-based commercial REIT with nine properties in China, Hong Kong, and Japan.
For the quarter ended 31 December 2018, MNACT reported that gross revenue grew by 19.4% year on year to S$105.6 million, while net property income improved by 18.5% year on year to S$84.6 million. Similarly, the REIT’s distribution per unit (DPU) was up by 3.2% year on year to 1.927 Singapore cents. The growth was driven by the acquisition of Japan properties, as well as higher rental rates from existing properties.
Cindy Chow, chief executive officer of the REIT’s manager, commented:
“MNACT continued to register another quarter of steady year-on-year DPU growth. While there may be headwinds arising from the trade tensions and rising interest rates, which have caused volatility and uncertainty in the economic environment, the Manager remains committed to mitigating any adverse impact to create sustainable value for the Unitholders. The quarter also marked an important milestone as Festival Walk celebrated its 20th anniversary with a series of promotional events during the Christmas festive season, including the ‘Merry-Go-20th Christmas Lighting Ceremony’ with a 13-metre tall giant birthday cake as its centerpiece. Strong demand for space from tenants, driven by the popularity of Festival Walk among shoppers, has continued to support the mall’s steady performance since its inception in 1998.”
As of 31 December 2018, the REIT’s gearing stood at 39.0%, and its committed occupancy rate stood at 99.7%.
The Foolish bottom line
Looking at what institutional investors are doing could be a useful tool in your toolkit when sourcing for investment ideas. But do note that the information presented here is by no means a recommendation to take any action on the stocks mentioned. Instead, it should be viewed only as a useful starting point for further research.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.